There is a weekly podcast put out by a George Mason professor of economics called EconTalk. It's a good podcast, it's meant for everyday people. He just interviewed one of the guys from Bitcoin a few weeks ago. If you're unsure about Bitcoin or want to know more about it then check out the interview. It's about an hour long:

Oh ya, I forgot putting in my opinion. I didn't know too much about BitCoin before listening to that podcast, but my gut reaction was negative. One of the problems with fiat paper is that it can just be printed and printed without limit. I figured a virtual currency would be even worse, at least there is a cost to paper and the time of the printing press.

After listening to the podcast I'm interested in BitCoin and I hope it continues to develop. There is a built in mechanism to hold inflation to a slow steady predictable rate and because BitCoin is open source there is a check against the system being gamed. I don't think there should be one "official" currency. Let's have free exchange and let the currencies compete in the market place. I agree with Backwoods, BitCoin is going to come under some pressure if it continues to grow. Way to much freedom in the hands of the people and not in the banking elite.

True, there are some big hurdles facing Bitcoin, but the idea of an open-source P2P crypto-currency is very intriguing. With enough momentum behind it, it seems like it could be hard to stamp out and I'll be interested to see how things develop.

A new private currency called "Bitcoin" has hit the scene. It is a digital currency that my producer tells me is valauble partly because it's untracable: there is supposedly no way for the government, or anyone else, to see who owns or transfers Bitcoins.

So people are putting their faith in the imperfect anonymity of Tor, and the shiny new alleged anonymity of Bitcoin, and then having their drugs delivered to their homes via the United States Postal Service.

Yeah, that sounds safe.

I worry that users of Bitcoin, Tor, PGP or GnuPG, e-gold, etc, seem to develop an attitude of invulnerability. These privacy techniques are a defense against snoops, but they're only a defense, not perfect protection against all forms of intrusion. And of course, as users get cocky and move into black-market stuff, this just draws more government attention and interference.

I like the idea of Bitcoin. It is hard to make transactions with gold or silver unless you are in person or trust shipping gold or silver. This makes gold and silver hard to make transactions over the Internet in a safe or timely manner. The code and specifics of Bitcoin are completely open and maybe reviewed by anyone. Bitcoin is not completely anonymous. The government can use ISP logs, wire taps, warrants and other methods they currently employ to follow computer transactions. Once they discover your public Bitcoin addresses they can track every transaction those Bitcoin addresses make, but they have to discover you Bitcoin addresses that you use. You can create an unlimited number of Bitcoin addresses for yourself. Every Bitcoin transaction is open and published to the Internet over the peer to peer network, (P2P). That is part of what makes it safe. The P2P network verifies every transaction to create a P2P trust and verifies the integrity of the transactions to help prevent fraudulent transactions and double spending of the same Bitcoin.

Here is a video from CBS speaking with one of the code developers of Bitcoin.

I love bitcoin, that said, it's major flaw in my eyes is it's reliance on the internet... without the bitcoin network up and running it's not very useful, and it's value would be greatly diminished. Certainly not something you can rely on in a survival situation, but I think it has great potential for just general transactions. Try hiring someone in Moldova to do a little web development (which I've done). Paypal doesn't support them, so you are stuck with either expensive bank wires or western union. With bitcoin there is no middle man.

I've seen a lot of youtubers hating on bitcoin, saying only gold is real money because of it's "intrinsic" value. Doesn't anyone ever ask what makes gold such a good currency? It has a lot of the properties required to be money: stable supply, can't counterfeit it, not consumed industrially, easily divisible, recognizable. Bitcoin has all these qualities too.

It looks like Mt. Gox was a bit inept at cyber security, to put it mildly. How many of you frantically searched for your info on the leaked database?

Centralized exchange trading, like Mt. Gox, are the weak spot in the Bitcoin economy, they're too tempting for thieves, governmental or otherwise. If someone can figure out a simple, secure, and decentralized method of exchange, this currency will really get some legs.

It seems to me that the fact the transactions cannot be automatically reverse presents a problem and a market.The problem is fraud since someone can "take the money and run" without any recourse on your part.The market this presents is a possibility of an escrow service for transactions.Does anyone have thoughts on this? How to we decrease the risk of fraud? how can we use an escrow service and still remain fair and anonymous?

I love bitcoin, that said, it's major flaw in my eyes is it's reliance on the internet... without the bitcoin network up and running it's not very useful, and it's value would be greatly diminished. Certainly not something you can rely on in a survival situation, but I think it has great potential for just general transactions. Try hiring someone in Moldova to do a little web development (which I've done). Paypal doesn't support them, so you are stuck with either expensive bank wires or western union. With bitcoin there is no middle man.

There are options out there for a physical transference of bitcoin (see https://www.casascius.com ) but that of course presumes you trust the maker of the currency, much like all other money systems.

Oh, and I respectfully submit that Bitcoin is the very definition of Fiat, it isn't even printed on paper you can burn if you get cold.

Intersting development in Iran is now offering one "proof of concept" to the potential validity of the bitcoin.

It seems that due to US economic sanctions against Iran and against any trading with the Iranian Rial, there are now no dollars flowing through the Iranian economy. This has tanked the value of the Rial. But ... there are still plenty of web-connected Iranians who have their own persoanl stashes of bitcoins. And they are trading their bitcoins for US Dollars. Thus they are achieving a backdoor through the internet into the global economy (an economy still heavily dictated by the US Dollar).

... Created in 2009 by a mysterious programmer named Satoshi Nakamoto, bitcoins behave a lot like any currency. Their value is determined by demand, and they can be used to buy stuff. Bitcoin transactions are encrypted and handled by a decentralized global network of tens of thousands of personal computers. Merchants around the world accept the currency, from a bakery in San Francisco to a dentist in Finland. Individuals who own bitcoins and wish to exchange them for physical currencies like euros or dollars can use exchange sites such as localbitcoins.com, a Finland-based site founded by Jeremias Kangas. “I believe that bitcoin is, or will be in the future, a very effective tool for individuals who want to avoid sanctions, currency restrictions, and high inflation in countries such as Iran,” Kangas wrote in an e-mail.

The advantage for Iranians is that bitcoins can be swapped for dollars that can then be kept outside the country. Another plus: Regulators can’t easily track the transactions, since bitcoins aren’t issued from a central server. Bitcoin users can conduct business on virtual private networks, which hide customers’ identities....

For those of you who have been curious about BitCoin, I thought I'd summarize my experience with this brave new digital currency and how I have been trading USD for BTC over the last year.

Since I started this thread, there was a very large BitCoin bubble where the value of a single BTC went to over $30 per BTC. Around this time there were several well publicized hacking events which took the wind out of the price and it plummeted to less than $4. Mt. Gox, the major online exchange, was hacked and almost went out of business and the future of the currency appeared doomed. For the last half of 2011, I sat on the sidelines watching the price and monitoring the chatter surrounding its future. I expected to see it disappear, but slowly the price began to pick up and it became clear to me that the underlying design of the currency is sound and that the publicized losses were due to poor online security precautions by users, rather than a flaw in the architecture of the currency.

January 2012, after seeing the prices slowly creeping up again, I jumped in and started exchanging dollars for bitcoin, via Mt Gox, for around $6 per coin. It's a little complicated getting dollars into a Mt. Gox account, but my solution has been to use Dwolla (an online payment service that will do business with Mt. Gox, unlike PayPal) as the intermediate step between my bank and Mt. Gox.

Really the only hiccup I've had has been related to the increasing security at Mt. Gox. About half way through the year they gave away free Yubikeys for each account holder, which sounded great, especially since I was already using one for managing my online password security scheme and had not had any problems with the technology. However, my Mt. Gox Yubikey is very tempermental when used and frequently would not be recognized, and thus threatened access to my Mt. Gox account, as well as a Blockchain account that I'd set up to use the same Yubikey. After this, I gave up on the Mt. Gox Yubikey and am using Google Authenticator on my iPhone as a secondary password, instead.

Soon after this, Mt. Gox encouraged me to update my account to "Trusted" status by verifying my identity, which would allow me to transfer larger amounts of currency. Although the amounts I'm trading didn't even get close to these limits, I decided I'd submit jpgs of my passport and a utility bill. The next day they sent me an email and said that my account would not be updated to "Trusted" unless I submitted notarized physical copies of the documents I'd sent them online. I figured, no big deal, I don't need the extra limits provided to "Trusted" members, so didn't do anything about it.

The problem was, a month or two later, when I tried to transfer some Bitcoin to a Blockchain wallet (which is highly encouraged, like a lot of things in life, you don't want all your coins in one place) but found that Mt. Gox was blocking any transfers out of my account. Of course, they still let me put money into the account and do trades, but would not allow me to remove either dollars or bitcoin until I completed the verification process and obtained "Trusted" status. Needless to say, I was a bit peeved, but no amount of online whining to Mt. Gox did any good, so I shelled out $70 for notarized copies and postage to Japan (Mt. Gox's physical address). This did it, they've awarded me "Trusted" status, although it took almost a month from the time the notarized documents were mailed.

Last week, there was a brief spike up to $19 per bitcoin, then quickly retreated to $16, and now it is playing with $18. I have no idea how this will all play out in the long run, but I will continue to build my holdings. There is a maximum number of coins that will be minted and each coin is divisible to 8 decimal places, so who knows where the value of a BitCoin will be in 10 years, it could be defunct, or it could be worth $100,000. I certainly am not putting all my eggs in this basket, just as I'm not putting it all into metals, either, but I think it's an interesting concept that holds a lot of promise.

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nelson96

Thanks for the updste FeeLancer, keep us up to date as time goes on. You've done a lot more to make this work for you than I am willing to do, but I will keep watching in case it gets easier and more secure.

I've been playing with bitcoin for a while, too. I can't say they are making me rich or anything, but I have definitely made money compared to the USD or gold.

I like to play games and gamble a bit, too. I lose some, win some, and it's not central to my investment strategy or anything, but it's for entertainment.

Something I have been watching closely are sites like http://bitbears.com and http://bitcoingoldbar.com They are like ponzi or chain schemes, but you can actually make money on them if you watch them and get in during a rush or when it is climbing. I had made a bit on Bitbears, but not on the other one. Both of those reset if they sit idle for a few days, so watch out, or at least, try and promote them, if you can. I basically just watch to see others playing, and when the values are climbing, I get in and get out.

Aside from that, I am often thinking of BTC based businesses. I think there is potential there. One major obstacle I see is that you can't really go from a Credit Card to bitcoins. I know the reasons behind this, but if someone figures that out, not only will it open up bitcoins to the masses, they will stand to make a lot of $$$.

I've got some. I've bought silver with it, donated some bitcoins to charities with it a couple of times. No interest in the gaming aspects of bitcoin.

Free State Now (A group associated with the free state project trying to accelerate sign-ups) recently started taking bitcoins. I've sent them some cash and will probably send them some bitcoin fairly soon.